Still Waiting on Fed Above All Else

Still Waiting on Fed Above All Else
Written by Publishing Team

MBS Live Recap: Still waiting for the Fed above all else


Thursday, January 20, 2022 at 4:14 pm

Bonds enjoyed another day of modest improvement on Thursday. On the plus side, the gains are good. On the other hand, the pattern looks eerily similar to last week (i.e. a few days of stabilization before further weakness). It is good to remember that the recent weakness is primarily driven by the market’s adjustment to the shift in Fed policy expectations. As such, it’s hard to make the case for a major friendly bounce ahead of the Fed’s announcement next Wednesday.

  • Buy Fed MBS 10 AM, 11:30 AM, 1 PM

  • Unemployment claims … 286 thousand versus 220 thousand vicast, 231 thousand previous
    Philly Fed Index……….. 23.2 vs. 20.0 f’cast, previously 15.4
    Existing home sales….. 6.18m vs. 6.44m meet, 6.48m previous

08:59 AM

Moderately stronger overnight with the most gains during European trading hours. Little changed in the first hour as the 10-year average fell 2.5 points per second at 1.829 and Mohammed bin Salman rose by just over a quarter of a point.

11:45 am

The sideways trend is slightly weaker as the trading session continues, but still in positive territory. MBS is up 5 points (.16) and the 10-year yield is down 1.8 basis points at 1.838.

02:58 PM

Slightly weaker after a 10-year TIPS auction, but is now recovering. Trading levels are in line with the latest update.

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